Eight companies in the PURE Business Group – whose tagline was ‘Changing the Legal Universe’ – went into administration yesterday, with more than 200 shocked staff losing their jobs as a result.
PURE – set up and owned by entrepreneur Phil Hodgkinson – is a collection of legal and other companies that was handling over 12,000 new instructions each year in high-volume areas of consumer litigation.
Rob Armstrong, Michael Lennon and James Saunders of Kroll Advisory were appointed joint administrators yesterday and eight group companies have ceased trading.
They are: Astute Business Management Consultants, PURE Technology Systems, PURE Reporting Services, PURE Claims, PURE Legal, PURE Claims Support Services, Connect Costs, and PURE Costs Budgets.
Other companies within the group remain trading and are unaffected by the administration process.
Not all are active but they include PURE Litigation Funding, PURE Commercial, PURE Mediation, PURE Investment Management, PURE Sports Consultancy and PURE Legal Costs Consultants. Legal Futures understands that 135 staff remain employed.
In a statement, Kroll said the group was handling over 20,000 live claims and the joint administrators were “taking the steps necessary to ensure all client files and monies are secure and claimants are being contacted to explain the next steps”.
The companies collectively employed 256 staff and operated from sites in Liverpool and Prescot in Merseyside, and their closure resulted in 203 redundancies.
“The administrators are working with the remaining employees to wind down operations and in providing support to redundant employees,” Kroll said.
Files have been transferred to other law firms with the help of Recovery First, a business that specialises in retaining work in progress while transferring work for firms exiting practice areas or going out of business.
The PURE group employed 350 staff in total and messages on social media from staff made it clear that yesterday’s news came out of the blue.
Group HR manager Tina Flanagan – who described PURE as one of the best companies she had ever worked at – wrote on LinkedIn that it was “forced into administration today and we were all made redundant”.
Operations manager Jessica Stobbart was one of many former staff who spoke warmly of the firm. She said on LinkedIn: “The last 4 years have been the best. It wasn’t just work, the people, the atmosphere, the drive, the passion made PURE.”
PURE Legal, a solicitors’ firm, and PURE Advocacy and Litigation, a barristers’ chambers, are alternative business structures. The most recent filed accounts for PURE Legal, for the year to 31 March 2020, recorded a profit of £3.3m on an £18m turnover.
It was only in August that Mr Hodgkinson – who is the chairman of football club Huddersfield Town – told Legal Futures that he was targeting a 150% increase in new instructions to 30,000 a year after securing a multi-million-pound funding facility from Sandfield Capital.
Sandfield is a specialist legal disbursement funder launched a year ago and Mr Hodgkinson was its co-founder and non-executive chairman.
He stressed that he had no involvement in operations, including funding decisions, and pointed out that Sandfield’s backers had to sign off on backing PURE too.
PURE’s model centred on non-recourse Consumer Credit Act disbursement loans to customers, which were insured by a panel of A-rated insurers and re-insurers.
Having exited the injury market earlier this year by selling Pryer Solicitors – because the growing prevalence of fixed fees made them far less economic – the group was acting for people with six types of claim: negligent wall insulation, mortgage mis-selling, undisclosed commissions, mortgage miscalculations, housing disrepair and data breaches.
The plan Mr Hodgkinson announced in August was to increase the areas it targeted, with mis-sold car finance emerging as number seven and ambitions to have 10 case types by the end of 2022 “with sufficient solidity to take us through the next decade”.
He also said he was looking to recruit another 100 people and as recently as last week he was advertising new roles via LinkedIn and publicising the coming launch of a costs law academy.
Also in August, a High Court ruling on a low-value data breach claim handled by PURE threw into doubt the the long-term viability of this area of practice.
Mr Hodgkinson made his name by building up Compass Costs Consulting, which he sold to Quindell in April 2013 for £14m and became chief executive of Quindell Legal Services.
He later admitted that he was wrong to sell a business he had built up over 13 years to the troubled PLC.
The news led to Huddersfield Town putting out a statement reassuring supporters that the club was not affected by what was happening at PURE.
It said: “Mr Hodgkinson holds 75% of the club’s shares through PURE Sports Consultancy. This company is not part of this action and, as such, is legally unaffected.
“Our board of directors would like to assure Town fans that the club remains able to meet its financial commitments over the short, medium, and long term. Our day-to-day activities remain unaffected.”
It is the second Liverpool-based legal business to go under in a week, after personal injury firm Hampson Hughes entered administration last week. An insolvency practitioner at Leonard Curtis has been appointed, who has instructed Recovery First to transfer the files.